It’s about time we had another honest conversation about that three-digit score that can cost you a ton of grief...
I’m talking about your credit score. Dun, dun, dunnnnnnnnn. (Cue the dramatic horror movie effects.)
A good credit score doesn’t only impact your ability to get approved for a credit card or a loan; it also affects how much you pay for it.
Bottom line: A better credit score gets you a lower interest rate, which reduces your monthly payments. This is monthly savings that could be used to pay off debt, beef up your savings account or help you pursue a life-enriching passion.
Here are four ways a good credit score can save you cash:
1) It’s Less Expensive to Finance a Car
I’ve been riding around in my whip, aka my used 1999 hooptie, for what feels like, forever. I paid $4,000 for it in cash about 10 years ago.
So you can only imagine how excited I am that Ford Motor Company has allowed me to test drive the 2017 Ford Fusion Hybrid as I head to the Essence Festival to speak on their panel!
Check out my test drive here: https://youtu.be/9KfSjWZCx3s
Since I’m on the hunt for a new car, auto loan interest rates are at the top of my mind. Let’s look at a quick example of how a high-interest rate hurts your pocketbook.
Say a poor credit score lands you a 6% interest rate on an auto loan for 60 months.
A loan of $10,000 will cost $193 per month and $1,600 in total interest for 5 years.
What if a good credit score gets you 3% interest?
The same $10,000 loan will cost $180 per month and $780 in interest for 5 years.
That’s an interest savings of $819! Woot Woot!
You could finally start that investment account you’ve been procrastinating about.
2) It’s Less Expensive to Own a Home
Same interest savings applies here, but on an even larger scale.
A home is one of the largest purchases most of us will make in our entire lives.
Just think about it, you’ll be making payments on that mortgage for 30 years.
If a bad credit score gets you a less than desirable interest rate, that’s 30 years of savings you’re missing out on that could be used for retirement.
That could add up to thousands of dollars over the life of your mortgage!
3) It’s Less Difficult to Repay Credit Card Debt
If you’re repaying credit card debt, a bad score can keep you locked into a contract with high interest.
On the other hand, a good credit score gives you more options to pay off debt faster.
You can negotiate with your credit card company to lower the interest rate. You can also qualify for a balance transfer deal.
A balance transfer is when you move your debt to a new credit card that has low-interest or no-interest for a certain amount of time.
Your FICO score needs to be in the high 600’s to have the best chance at getting approved for a balance transfer.
4) Your Utilities Can Cost Less
Did you know that some utility companies charge you more if you have a low credit score? Yup!
Here’s why… A low credit score can signify that you’re less likely to pay a bill or creditor on time, or in full.
If your score is low, some utility companies try and get as much money from you upfront, by charging you more in anticipation that you will likely become delinquent later on down the line.
If your credit score is high, those same companies assume that you’ll make timely payments and extend a lower monthly rate, knowing that payment will not be an issue.
How Do You Raise Your Score?
I made a short video to help you, now: https://www.youtube.com/watch?v=t4Sd6otItXg
Want to Learn EVEN More About Credit?
Of course you do. Improving your credit is going to save you money, right?
You can learn more about money and credit with me on stage during the Essence Festival on Ford’s panel and Sunday, July 3rd at 1pm.
As I mentioned before, Ford Motor Company has been kind enough to loan me their 2017 Ford Fusion Hybrid to test drive. It’s super quiet, feels like luxury on the inside, and is awesome on gas; an important feature for a saver like me.
As I prepare to speak on the Ford panel, during the 4th of July weekend, I’ll be test driving this beautiful car. Will it be the one?!
*** Ford Motor Company hired me to share my Ford Fusion and Essence Festival experience
My Lisa Rule: I have 4 sisters and Lisa is the baby (well she’s not a baby anymore). Of all of my sisters I’m the most protective over her. Before I share any product or service with you, it must pass my Lisa Rule.
What’s the Lisa Rule? If I would not advise Lisa to use a product or service, I won’t advise you to. YOU are my Lisas. I feel protective over you and your financial journey.
The products/services mentioned in this post pass my Lisa Rule. Yes, I’m a spokesperson, but I would not recommend a product or service that I didn’t believe was helpful and useful.